David Cameron Tells Europe: Don't Hold Back Shale Gas Industry with New Regulations

David Cameron told Jose Manuel Barroso he is against any new EU legislation on the shale gas industryReuters

UK Prime Minister David Cameron is warning Europe not to shackle the continent's emerging shale gas industry with new regulations, despite public concern about the controversial fracking process used to extract the resource.

Cameron wrote to European Commission President Jose Manuel Barroso ahead of a package of EU analysis and proposals on energy due to be published in early 2014.

The prime minister is keen to unlock the potential of the shale industry in the UK after vast reserves of the unconventional gas were confirmed to exist underneath parts of Lancashire and Yorkshire. It is not yet clear how much can be extracted or if it is commercially viable to do so.

He and Chancellor George Osborne have already unveiled an array of measures to encourage shale gas exploration, from tax breaks for energy firms to a share of the revenues for communities nearby where drilling takes place.

"As you know, the shale industry is at a critical and early stage of its development in Europe. There is clearly merit in providing additional clarity on how the existing comprehensive EU legislative framework applies to shale gas," Cameron wrote to Barroso.

"However, I am not in favour of new legislation where the lengthy timeframes and significant uncertainty involved are major causes for concern. The industry in the UK has told us that new EU legislation would immediately delay imminent investment."

If the UK's shale gas potential is realised, thousands of jobs may be created and hundreds of millions more revenue may pour into the Treasury.

Water supply

Fracking is the technique used to extract gas trapped in shale rock. It works by drilling deep wells into shale rock and then using hydraulics to blast liquid down them, fracturing the rock and releasing the gas which is tapped off at the top.

The extraction process involves a number of toxic chemicals, which environmental campaigners say risks contaminating the water supply. Mild tremors can also be caused by fracking.

A report by Water UK, the body representing the country's water suppliers, said that while there are potential risks to water and wastewater services, these can be mitigated through proper enforcement of the regulatory framework.

A review by Public Health England, a government body, found little health risk linked to the shale gas industry.

"The currently available evidence indicates that the potential risks to public health from exposure to emissions associated with the shale gas extraction process are low if operations are properly run and regulated," said John Harrison, director of PHE's centre for radiation, chemical and environmental hazards.

"Good well construction and maintenance is essential to reduce the risks of ground water contamination."

However, a study in the UK by the Missouri School of Medicine linked the chemicals used in the shale gas extraction process with human hormone disruption, causing infertility and birth defects, and warned that people will become increasingly exposed to the toxins.

Bills

Cameron has claimed that shale gas production would bring down household energy bills in the UK, despite the industry saying consumer prices would probably be unaffected.

The prime minister is in the middle of a political battle over energy bills. Ed Miliband, leader of the opposition Labour party, pledged to freeze energy bills for nearly two years if he is elected in 2015.

The government responded by shifting green levies, which fund schemes such as insulating older properties to improve energy efficiency, away from energy firms and onto general taxation in the hope that bills are reduced as a result.